June 13, 2011

USAT’s Scott Patterson Covers the Neglected Topic of Business Formation, Not Particularly Well

usatodayTo say that the statistics concerning new business formation during the past few years haven’t been very good would be a major understatement.

USA Today’s Scott Patterson deserves some credit for even looking at the topic. It is tailor-made for neglect by the rest of the establishment press. When government policies lean towards lower taxation and regulation, policies left-leaning journalists tend to oppose, net business formations generally grow, and they’d rather not report it. In the high-tax, high-regulation environments they favor, net business formation slows considerably — and again, they’d rather not report it.

On the plus side, Patterson surfaced the biggest reason — “a huge amount of uncertainty” — why net small business formation is lagging. That said, the USA Today reporter showed that he (and his editors, if they actually looked at his submission) could use a bit of a tutorial on what some of the numbers published by Uncle Sam’s Bureau of Labor Statistics really mean. For example, he took “establishments less than one year old” to mean the same thing as, in his words, “new businesses started up.” Additionally, to get his arms around the entire picture, Patterson should have brought out the other side of the business formation equation, namely business deaths.

Here are several paragraphs from Patterson’s Sunday evening report, with a headline that doesn’t tie in very well to the underlying topic:

Small businesses, crucial to growth, face challenges

Entrepreneurs have started up the fewest new U.S. businesses in more than a decade, according to government figures that could spell more bad news for job creation.

Through the 12 months ended in March of last year, 505,473 new businesses started up in the U.S., according to the latest data available from the Bureau of Labor Statistics. That’s the weakest growth since the bureau started tracking the data in the early 1990s. It’s down sharply from the record 667,341 new businesses added in the 12 months that ended in March 2006.

Weak start-up growth has dire implications for jobs because small and midsize businesses have driven employment gains in the U.S. for years. Between the recession that ended in late 2001 and the start of the most recent recession in late 2007, businesses that employed fewer than 500 workers added nearly 7 million employees, according to data collected by payroll provider ADP, which tracks employment trends.

Meanwhile, businesses that employed 500 or more cut nearly a million positions over the same period, often because they sent jobs overseas. Smaller companies — think local restaurants, gas stations and mom-and-pop grocery stores — are far less likely to send jobs abroad. That’s why they are crucial to the recovery, economists say.

… Small-business employment growth has been waning in recent months. In May, businesses with less than 50 employees added 27,000 jobs, according to ADP. While that’s an improvement over a gain of 14,000 a year ago, it’s down sharply from the 84,000 jobs added in April and advances of more than 100,000 in December and January.

A huge concern for small businesses, says the NFIB’s Dunkelberg, is lack of clarity about what will happen in the next year in Washington. With another round of elections coming up and rancorous debate on Capitol Hill, businesses are unsure about what policies will be enacted by the government.

“There’s just a huge amount of uncertainty. And when you’re uncertain, you don’t make bets,” he says.

Below, readers will see that Patterson took a BLS table clearly labeled “establishments less than one year old” and presented it as “new businesses started up”:


The stats are not the same. The counts of “establishments less than one year old” above are as of specific points in time (i.e., March of every year), while “new businesses started up” is a measurement which encompasses a period of time (e.g., a quarter or calendar year). Many start-up businesses never get past the one-year mark.

What follows is the information Patterson should have used. It comes from BLS’s quarterly “Business Employment Dynamics” release, the latest of which was published on May 3, and goes through September of last year. The data is taken from the report’s final table, “Private sector establishment births and deaths, seasonally adjusted” (the published table goes back to 2000; only 2004-2010 is presented because of space limitations; “difference” calculations were done by me):


As seen above, net small business formation grew nicely from 2003 to 2005, and stayed positive until the end of 2007. But net job formation remained quite positive until the first quarter of 2008. The rest of the 2008 and 2009 were awful, though 2009′s final quarter showed hope for improvement 2010. But 2010′s formation numbers and jobs generated are about the same as 2009. So if net formations and jobs go positive in 2010, they probably won’t do so by very much.

If the so-called “recovery” occurring right now were as robust as it should be, net business formation and the jobs created from them should have gone positive almost immediately after the recession ended in June 2009.

The data presented generally support Scott Patterson’s main points. Next time, he ought to use the right data.

Cross-posted at NewsBusters.org.

Quote of the Day #2: On Politicians and Affairs

Filed under: Quotes, Etc. of the Day,Taxes & Government — Tom @ 8:00 pm

Heard this from a caller into Rush today (link will go behind subscriber wall in a week):

I want a leader like Ronald Reagan that’s gonna have an affair with United States, have an affair with United States. I am so tired of Obama having an affair with himself.

Quote of the Day #1: On King ‘No Ring’ James

Filed under: Quotes, Etc. of the Day — Tom @ 7:57 pm

Nancy Armour at the Associated Press:

When you make a spectacle of yourself and give the impression you’re above everyone else, as (LeBron) James did with his shockingly tone-deaf “Decision,” you have to back it up. Not only did James not live up to the hype he predicted, his ineffectiveness when it mattered most showed that his supporting cast in Cleveland might not have been the real problem.

Unlike I suspect many others, I’m rooting for James to overcome his demons and win several NBA titles. But I’d also like to see the return of the class individual who, when facing the bitter disappointment of defeat in his junior year in high school, namely Cincinnati Roger Bacon’s epic upset of James’s Akron St. Vincent-St. Mary’s team in 2002 — the only state high school championship game LeBron’s team didn’t win — made sure to shake hands with every Bacon player and generally handled himself with a level of professionalism years beyond his age.

The guy who with a teammate was caught making fun of an opponent’s illness during the NBA Finals needs to go far, far away.

I’m turning off comments at this post because I really don’t want to deal with the immaturity I’m seeing in the comments at far too many of the sports sites.

Greg’s Links (061311, Noontime)

Filed under: Lucid Links — Tom @ 12:36 pm

Okay, Doug “Larwyn’s Links” Ross, you’ve got some (lower volume) competition, which in the sensible conservative (redundant term) universe is a good thing.

El Presidente and the New Normal:

The Evolving Police State:

  • SFGate’s Politics Blog: “Food Safety Chief Defends Raw Milk Raids” (HT Dad29, whose post title is “FDA’s Power Grows Exponentially”)
  • New York Times: “F.B.I. Agents Get Leeway to Push Privacy Bounds” (HT Tom Maguire via Dad 29; Maguire notes that “The last lib would have leapt from a ledge if this were happening under Evil BushCo.”

Debt-Ceiling Dynamics:

  • At RedState: “Debt-Limit Surrender”
  • At Human Events: “Secret Negotiations on Debt Limit Increase” (HT Dad29: “Heard About the Debt-Limit Negotiations? I Didn’t Think So”)

Update: In Two Monday E. Coli Reports, AP Avoids Describing Involved Farm as ‘Organic’

Yesterday (at NewsBusters; at BizzyBlog), I noted a reluctance on the part of Associated Press reporters to describe the farm involved in “the world’s deadliest known outbreak of E. coli” as “organic.”

The wire service issued two additional reports this morning, both of which failed to use the “O-word.” The case for the use of the word in these reports is as strong, if not stronger, than it was in the seven items discussed yesterday. Beyond that, AP, along with the rest of the press, has failed to explore the possibility that Germany’s 1950s-era outlook towards farming practices may have helped to create the conditions allowing such an outbreak to occur.


WSJ, in Essence: Give Us Irradiation or Give Us More Death

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 9:11 am

As usual in matters such as these, the Journal’s editorialists make sense — probably too much sense for defenders of leftist pet causes (bolds are mine):

German Greens and their European Union acolytes have long fought scientific advances in food production and protection. After a spice manufacturer in Stuttgart employed the world’s first commercial food irradiation in 1957, West Germany banned the practice in 1959 and has since allowed few exceptions. So it’s no small scandal that the latest fatal E. coli outbreak has been linked to an organic German farm that shuns modern farming techniques.

Officials on Saturday confirmed that sprouts grown south of Hamburg were contaminated with the deadly strain that has so far killed 35 people and sickened thousands. The news will comfort European consumers, who have been afraid to eat greens for weeks. But the panic isn’t over: Farmers want hundreds of millions of euros in reparations from Berlin, which initially named Spanish cucumbers as a suspect and cautioned against all salad greens, and there are calls for a new, Europe-wide food-safety certification system.

So here we go again: agitation for more money and regulation, though agricultural authorities still don’t know where the German farm erred. Sprouts require warm and humid farm environments, which makes them particularly hospitable to bacteria. But both harmful and harmless E. coli strains are present in the intestines of most animals, as well as human beings. No amount of standardizations or certifications will guarantee E. coli’s eradication from food.

The best practice for doing so would be, well, irradiation, which involves sending gamma rays or electron beams into meat, poultry and produce. The process can deactivate up to 99.999% of E. coli, and was declared safe by the U.S. Food and Drug Administration almost 50 years ago. Even so, less than 10% of the global food supply is irradiated.

… study after study has turned up no evidence that zapping food with low doses of radiation damages human health. The U.S. Centers for Disease Control and Prevention, the American Medical Association, the International Atomic Energy Agency and the U.N.’s Food and Agricultural Organization and World Health Organization have all endorsed the process as safe and highly effective.

These facts haven’t discouraged the even more effective media campaigns of a few pressure groups that never met a food technology they didn’t fear.

… This latest E. coli outbreak is painful real-life evidence that natural foods are not always better, nor safe for consumption.

Given that the outbreak is, as noted yesterday, “the world’s deadliest known outbreak of E. coli,” the burden of proof would appear to be on organic farms to prove that they’re a safer (or at least as safe) alternative. The guess here is that instead of doing the dirty work to self-regulate their industry, they’ll just whine and continue lobbying to prevent the spread of modern methods which have long since proven superior.

Latest Pajamas Media Column (‘Pick Up the Darned Phone’) Is Up

Filed under: Economy,Money Tip of the Day,Taxes & Government — Tom @ 8:47 am

CobwebsOnTelephoneIt’s here.

It will go up here at BizzyBlog on Wednesday (link won’t work until then) after the blackout expires.

Among other things, it suggests that people reacquaint themselves with the oral communication aspects of their telephones, and that they avoid sending a series of e-mails when one phone call would address a situation.

Positivity: Living history – not just studying it

Filed under: Positivity — Tom @ 5:56 am

Here’s a nice story which deserves wider notice from longtime Toledo-area blogger and talk host Maggie Thurber.

Be sure to go to her post for an exclusive interview with its subject, Corey Fink.

From Rogers High School in Toledo:

Rogers High School student Corey Fink is going to get the opportunity of a lifetime – a chance to actually live history. He and his American History teacher, Joe Boyle, are one of 15 student-teacher teams selected in a nation-wide competition to participate in The Albert H. Small Student/Teacher Institute sponsored by National History Day.

This year’s theme, Normandy: Sacrifice for Freedom, is of special interest to Boyle whose uncle is buried in Normandy.

Together, the two have spent the last several months reading and researching the battle in preparation of their additional studies at the Institute before travelling to Normandy to experience the sights and sounds of the area first-hand.

As part of the requirements, Corey had to research a veteran of the battle from his home state. He chose Captain John A. Kulp of Franklin County who was awarded the Distinguished Service Cross while serving with the 8th Infantry Regiment, 4th Infantry Division for action against the enemy on June 21-22, 1944.

From the citation:

“When Captain Kulp’s company was pinned down near Cherbourg by heavy fire from strong underground positions, he made a person reconnaissance in the face of the enemy fire to determine the best way to assault the position. Returning to his company, he organized his men for the advance and led them toward their objective. With complete disregard for the intense enemy fire, he moved from one platoon to another, directing and encouraging the men in their advance. At the head of his unit as they neared the enemy fortifications, he led a bayonet charge with overwhelmed the enemy garrison and forced the surrender of 144 Germans.”

Corey will also lay a wreath at the U.S. Cemetery in Normandy as part of the schedule while in France.

Corey was selected, from all of Boyle’s students, to apply for the program. After speaking with him, I understand why Boyle chose him. He describes himself as ‘a history geek,’ and exhibits a maturity in perspective that belies his 15 years. He is at the top of his class, having just completed his sophomore year, is active in multiple clubs and is a member of the track team. He’s proud of his service hours, working primarily in youth programs, and doesn’t seem bothered by the fact that he and his little sister celebrate their birthdays together because of the closeness of the days.

Boyle, who because of his uncle’s service has long had an interest in the taking of Normandy, was a journalist before entering the teaching field and has been the American History and government instructor at Rogers for seven years. He was the BCSN Teacher of the Year for the 2010-11 school year.

This is certainly a unique opportunity to ‘live history,’ as Boyle described, rather than just study it in the classroom. …

Go to Maggie’s post for the rest of the story, and the video.